Voice of the Free Press: The Dealer.com deal - risks and opportunities

Dec. 21, 2013

Dealer.com on Pine Street in Burlington. / RYAN MERCER, Free Press

Written by

Free Press Editorial Page Editor

The blockbuster sale of Burlington-based Dealer.com to a New York-based firm presents a fresh set of opportunities for the city and Vermont, all with an equal measure of risk.

The Dealer.com sale is a resounding endorsement of a Vermont business success, but for the long haul makes for a more uncertain Vermont future for the company and its employees.

The home-grown tech company announced on Thursday that the firm had signed a sales agreement with Dealertack Technologies of Lake Success, N.Y., in a deal valued at $987 million — including $620 million in cash and 8.7 million shares in Dealertrack.

The sale price, certainly a stunning figure by Vermont standards, is a testament to the hard work, innovative spirit and entrepreneurial essence of the people at Dealer.com, starting with the founders.

Becoming part of a large company also means better access to the capital Dealer.com can use to fuel its continued growth.

The nearly $1 billion deal is affirmation that Vermonters can grow their own when it comes to world-class companies. If Dealer.com could do it, than others can start a business here, find the talented partners and employees, and grow into the next big success story.

The sale also means the final say about the company’s future moves out of state, out of the hands of people who live in Vermont with everyday ties to neighborhoods, schools and local shops.

The sales announcement comes with the familiar statements about a commitment to staying put, with Dealertrack saying the company “places a high value on the culture of creativity and innovation that has been the hallmark of Dealer.com, and plans to establish Dealer.com’s Burlington, Vermont, headquarters as a center of excellence for digital marketing solutions, along with Dealertracks’ Dallas, Texas, office.”

Yet the inclusion of Dallas in the statement speaks to the fact that Dealer.com becomes one among many instead of the center of its own universe.

Decisions about Dealer.com now necessarily becomes part of a larger corporate calculation at Dealertrack. The people at the Burlington operations will likely have to share in the hurt of bad times, taking their share of the pain even if the problem is centered on another part of the company.

That’s the yin and yang of corporate ownership — more resources, less local say. That means Vermont must continue to expand the breadth and depth of the state economy and avoid betting too heavily on just a few superstars.

Dealer.com has been the local-company-made-good of the moment, chosen numerous times by Vermont politicians — including Sen. Patrick Leahy, Gov. Peter Shumlin and Burlington Mayor Miro Weinberger — as the backdrop when announcing good economic news.

Mayor Weinberger responded to the news with a statement that included the line, “The news is also a high-profile demonstration that Burlington is a wonderful place to create and grow a successful tech business that should spur further local investment.”

The city and the state have no choice but to live up to the mayor’s words.